Executive Summary
As the volume of information grows freely on the internet, the dynamics of working as a professional are beginning to change. While in the past, the defining characteristic of a professional was that he/she knew more about their subject matter than the client did, that is less and less the case in today's environment. Instead, it's increasingly possible that when the client walks in the door, they already have nearly the same information as the professional, whether that's in the case of a car dealership, a doctor, or a financial planner.
In this guest post, Dutch financial planner Ronald Sier shares his thoughts about the implications that this freedom of information is changing financial planning. From Ronald's perspective, the good news is that financial planners will not be made unnecessary or irrelevant in this information-laden future, because ultimately we as human beings are still social creatures that want and need to connect with others. We just don't hold ourselves accountable to technology the way we do a real, human financial planner.
That being said, however, the reality is that as information becomes more of a commodity, several aspects of financial planning do need to change, from how we relate to our clients, to the client experience of our service, to how we deliver financial planning to our clients. The key is to view technology not as a competitor to financial planning, but a way to augment it to serve more clients and serve them more effectively. And through it all, planners will need to learn to more effectively engage the "right-brain" functions of storytelling and emotion to help clients cut through the information overload to implement their financial planning goals. As Ronald states, "we are no more transferers of information. We are transferers of emotions."
Let me tell you a short story before we go in depth. It’s about the new reality of a car salesman. Traditionally, many car dealerships are based on a simple idea: they know more about cars and pricing and profit than the customer does. By leveraging the information advantage, they can sell cars at a higher markup, upsell add ons, etc.
But what happens when the customers know as much as they do, when potential customers know about every option, the inventory at every dealer, etc?
This is going to happen to every business, every sector, every level. Also to our financial planning business. When information is set free, does it help you or hurt you? If it is not helping you, now is the time to act.
Increasing Access To Information
Access to information is becoming more and more commoditised because of the importance and role of the internet. Yet life, and decision making, is growing in complexity because of the information overload. What this means is that we are relying more on our right brain (which controls our emotions) to make decisions. Information is no longer a competitive advantage for the financial planner. It’s the ability to make a true connection and provide a relationship of trust that is becoming the new force.
I think we all can’t deny that the internet has an impact upon our profession. In the future, technology will be more and more important in our financial planning business. Not only do people have the same access to information as the financial planner because of the internet. The internet also offers possibilities someday to take care of your financial planning yourself, fully online. No planner or advisor needed (check Betterment for an early example of where this may be going).
Although it might seem that these developments make a financial planner unnecessary in the future, I can assure you that this is not the case. On the contrary. Technology may augment human beings, but we as human beings will never hold ourselves accountable to technology and the internet the way that we do with another human being. Why? Because we are – by definition – social creatures. As Aristotle said: ‘Man is by nature a social animal …. Anyone who either cannot lead the normal life or is so self sufficient as not to need to, and therefore does not partake of society, is either a beast or a god.’
3 Critical Changes When Information Is A Commodity
But when the knowledge a financial planner has won’t be distinctive anymore (and will be seen as a commodity), what do we have to do to be successful in the new digital age? To answer this question, we must acknowledge that these developments drive 3 critical changes:
1. How we relate to our clients
What is your brand story? Why prefer you over your competitor (or the internet)? Why prefer Coke over Pepsi? How does your client decide to go in business with you or not? Every company or brand has a story. The story is great when it makes your client think or say: “I love this”. But what does your client really love?
Your client loves himself. Your client loves the memory of how it makes him feel. Your client loves that it reminds him of peace of mind, hope, freedom, status, independence or simplicity. In other words, your client loves it when it brings meaning to their lives. It’s hard to explain this. We can’t easily acknowledge the ‘nostalgia’ that drives the apparently rational (left brain) decisions your client makes. While in reality it’s your right brain who’s in charge. To understand your client you must know his problem and relate to that.
2. How we let our client experience our service
You probably spend a great deal of time setting business goals, working on strategy and planning for growth. It’s the sensible thing to do. After all, how can you get to where you want to go if you don’t know where you’re headed. But what if you spent the most of your time on your client’s goals and where he will be this time next year? The only way to become a part of your client’s story is to understand his story and give meaning to that. In everything you do, say, advice or invest, it should add value and relate to your client’s story. I can assure you that viewing your business this way is a great business strategy.
3. How we deliver services
We live in a world where we are connected as never before. Your connection with your client not only depends on your annual face to face conversation. You have so many chances to connect with your client. Technology makes this possible. Remember the words of Aristotle: we are social animals. So do you think that social media is this successful because of the ‘social’ or the ‘media‘? I think the answer is obvious.
With this in mind you can use your website and other media channels to communicate your story and beliefs into the emotional minds of your clients. And also use this technology to show that you understand your client’s story by delivering relevant content to advance happy endings of your client’s stories. That’s the new way you must embrace to connect with your client so that you make him feel your services.
When you do, technology works in your favor. Hugely. By using the technology and media channels effectively, you’ll be able to serve far more clients than you do now. Technology gives you the possibility to be more successful. But it’s not only you who will thrive. Imagine how the world would look if everyone in our society was receiving advice around cash flow planning, how to deal with money issues, business structuring, estate planning and so forth. How much more productive would our entire economic system be, how much less lawsuits and regulation there would be and how much happier people would be?
The Coming Revolution
I believe that these new developments drive an economic revolution where value creation and meaning will be key. And I believe that by changing the way that you relate to your clients will be the catalyst for that revolution. All you need to do is accept that you need to develop yourself by using your right brain potential and bring it to life with the possibilities that technology offers.
When you do, you will thrive and also advance the importance of the financial planner. And while being more successful, you are innovating our business.
So if we accept the fact that our role towards our client is different than some years ago, the importance of the financial planner will increase. We are no more transferers of information. We are transferers of emotions. If you embrace your new role, the sky is the limit.
A version of this article originally appeared on the See Beyond Numbers blog on July 18th, 2013.
Proud to know and having worked closely with Ronald. I truly believe he is right. To all: keep a close eye on Ronald!
Great Topic! And one which I have been advancing to the advisors who write for my magazine, Mindful Money. They need to change the mindset from parading about what they know and how certified they are to how they help people. How do you serve the world? What is the gift that you have to offer? So many Advisors do such terrific work but they can’t seem to get past old marketing hype to say simply how they work with clients.
It’s all about how you make them feel and the experience you create for them. Everyone said the internet was killing the Real Estate business. Bottom line, these industries are still service based and that is what it comes down to. You need to create a personal brand identity, not just a company identity.